Glossary

Wednesday, December 13, 2017

501(c)(3): Section of the Internal Revenue Code that
designates organizations, most of which are seeking foundation
or corporate
contributions, as charitable, tax-exempt, and nonprofit. Examples
of these organizations are religious, educational, charitable,
amateur athletic, scientific or literacy advocates, and organizations
concerned about public safety or involved in children or animal
abuse or domestic violence issues.

509(a): Section of the Code
that defines public charities (as opposed
to private foundations). A 501(c)(3)
organization may also have a 509(a)
designation to further define the agency
as a public charity.

990: The form filed annually
with IRS and the state's Attorney General's
office by all tax-exempt organizations
which provides tax information.

990 PF: The form filed
by all private foundations with IRS
every year. It provides financial
information, names of officers, trustees
or directors,
and a list of grant recipients and
amounts contributed during the year.

A

Accounts
payable: The amount owed by the
organization to outside sources for
items and services.

Accounts receivable: Unpaid
money owed to the organization from
outside sources for services rendered. Annual report: A report published
voluntarily by a foundation or corporation
that describes its grant activities.
A growing number of foundations and
corporations use annual reports to
inform the community about their contributions
activities, policies, and guidelines.

Assets: The amount of capital,
or principle funds, controlled by a
foundation or corporate giving program.
Assets are typically reinvested, and
grants are made from the earned income.

Audited statements: An evaluation,
made by an independent auditing firm,
of a nonprofit organization's financial
position. back to top

B

Beneficiary: The
organization or individual who is granted
funds from a donor (either an organization
or an individual).

Bequest: A gift, either monetary
or other, that is designated to be made
upon the donor's death.

Building campaign: An organized
fundraising drive to create funds for
construction or renovation of buildings. See
also Capital Campaign back to top

C

Capital grant
or capital support: Funds provided
for buildings, construction, or equipment;
they are not used for programs or operating
expenses.

Capital campaign: See Building
Campaign.

CD-ROM: Acronym for Compact Disk-Read
Only Memory. CD-ROMs are high-capacity
computer disks that allow for the storage
and distribution of large amounts of data
in a searchable format.

Challenge grant: A grant that
is made conditionally, typically that
the
gift is either matched or exceeded by
another funding source within a specified
time
period. The objective of this approach
is to encourage funding from other sources.

Committed funds: The part of a donor's
budgeted fund allocation that has already
been pledged for future gifts.

Community foundation: A type of
foundation formed by a variety of community-based
sources of support. This kind of
foundation typically specifies the community
it serves within a geographic area, and
a board from that specific community
often governs it.

Community fund: A fund raised
by the public to support the day-to-day
operations of community agencies.

Contributions committee: A
group organized, usually under the guidance of a corporate
foundation or contributions administrator, to review grants. Responsibilities
also can include policymaking and budget determinations.

Cooperative venture: A
cooperative endeavor by two or more grant makers, combining
funding responsibilities and/or contributing information
and technical resources.

Corporate contributions: Charitable
contributions, cash or in-kind, by a corporation.

Corporate foundation: A
foundation funded, either by permanent assets or with periodic
donations, by a profit-making company. However, the
foundation is not legally dependent on that company, even
though the foundation may carry the name of the parent company.

Corporate giving
program: A program where funds are given directly by
a corporation, typically through its Public Affairs or
Public Relations department, instead of being distributed
through a foundation.back to top

D

Deferredrevenue: Money
that’s already been received by an organization and carried
as a liability until the organization can fulfill the goods
or services promised for that money.

Declining grant: A
grant that is structured over multiple years and declines
each year in the anticipation that the receiving organization
will increase funding from other sources.

Demonstration grant: Funds
given to begin a pilot program in anticipation of its becoming
the standard to which others aspire.

Discretionary funds: Funds
that are distributed according to the donor’s case-by-case
discretion, as opposed to predetermined purposes.

Distribution committee: The
committee, made up of a broad representation of the community
served by the foundation, which decides on which grant requests
to approve.

Donee: The
recipient, either an individual or an organization, which
receives a grant. Also known as a grantee.

Donor: Individual
or organization that makes a gift or grant. Also known as
a grantor. back to top

E

Employee matching
grant: A contribution made by an employee to
a charitable organization that is matched by a similar
contribution from his or her employer.

Employer Identification
Number (EIN): A nine-digit number assigned and required
of all IRS-designated 501(c)(3) nonprofit organizations
by the Internal Revenue Service.

Endowment: A
bequest or gift that is intended to be kept intact to generate
income from its investment for an organization or foundation.

Expenditure responsibility: The
assurance required by law that funds donated for a charitable
reason but not to an organization that is classified by the
IRS as a “public charity.” back to top

F

Family foundation: A
foundation intended to implement the philanthropic endeavors
of a particular family, and whose board is likely made up
of members of that family.

Federated fund drive: A
fund-raising campaign whereby one organization, such as The
United Way, raises money for the member agencies that come
under it.

Fiscal year: Any
pre-determined 12-month accounting period, which may or may
not coincide with the calendar year, which an organization
uses its funds within. The fiscal year should normally
coincide with the organization’s operating cycle. This
accounting period is defined on the IRS Form 990.

Fixed assets: The
estimated value of equipment, buildings, land and other tangible
items owned by an organization.

Flow-through funds: Gifts
to a foundation used mainly for direct grant making, rather
than for endowing the foundation permanently.

Foundation: A
private nonprofit organization, established to further religious,
educational, social, or other charitable programs. It
is usually managed by its own directors and trustees, and
may receive its funds from, and is subject to control of,
an individual family, corporation or other group of limited
number.back to top

G

General/operating
support: A grant made for an organization’s operating
expenses instead of a specific intent.

General purpose foundation: An
independent private foundation that awards grants in a variety
of areas or interests.

Grant: The monetary
or in-kind gift to an individual or organization to further
its charitable pursuits.

Grantee: Individual
or organization that receives a grant. Also called a donee.

Grantee financial
report: A detailed annotation, often required by grantors,
of how their funds were used by a grantee. This
financial accounting generally includes expenditures from
grant funds and an organization’s overall financial chronicle
of revenue and expenses, assets and liabilities.

Grantor: Individual
or organization that makes a gift or grant. Also called a
donor.

Grants payable: Grants
or awards that have been pledged by an organization to
another organization or individual.

Grassroots fundraising: Efforts
to raise money from individuals or groups from the local
community on a broad basis. Usually an organization's own
constituents — people who live in the neighborhood served
or clients of the agency's services — are the sources of
these funds. Grassroots fundraising activities include
membership drives, raffles, auctions, benefits, and a range
of other activities.

Guidelines: Procedures
that should be followed when requesting funds from a grantor. back to top

I

In-kind
contribution: A contribution of goods or services
instead of a cash contribution.

Income: Contributions,
whether cash or in-kind, an organization has received.

Independent foundation: A
private foundation over which the original donor’s family
no longer has control.

Internal Revenue
Code: The U.S. taxation laws that are governed by
the Internal Revenue Service.

Inventories for
sale or use: Estimated worth of materials, goods,
and supplies an organization has made or procured for
future sale or use.

Internal Revenue
Service (IRS): The agency of the U. S. government
that has, as part of its duty under the Internal Revenue
Code, the authority of regulating public charities and
foundations.back to top

J

Joint funding: A
coordinated funding project, supported by multiple grantors
for a particular aspect of the project or contributing
to a common fund for use in that project. back to top

M

Matching grant: A
grant or gift made under the condition that a matched amount
from other sources is made on a prescribed basis, i.e.,
one-for-one, etc. back to top

N

Nonprofit: An
organization, as designated by the IRS, whose income is
used solely for its operations and stated purpose, not
for the benefit or private gain of stockholders, directors,
or any other persons with an interest in the company. back to top

O

Operating foundation: An
organization given a 501(c)(3) classification by the IRS
as a private foundation with its primary chartered mission
of conducting research, social welfare, or other activities.

Operating support: Gifts
made to an organization for its day-to-day expenses, such
as salaries, utilities, office supplies, etc. back to top

P

Payout requirement: The
legally required 5% minimum payout of asset worth foundations
must make in grants and administrative expenses.

Philanthropic advisor:
A person or firm that evaluates and guides donors in their
grant making decisions.

Pre-tax net income: A
corporation’s yearly net income, after any charitable contributions
are deducted and before taxes are paid.

Pledges / grants
receivable: Grants that have been assured
by an organization but have not yet been sent.

Private foundation: A
tax-exempt organization, as determined by the IRS under
Internal Revenue Code Section 501(c)(3), that receives
most of its income from an individual, family, or other
specific source.

Private operating
foundation: An endowed organization which uses its
funding to conduct a charitable service activity instead
of making grants.

Processed or received
date: The posting date that a contribution is credited
to the receiver’s account.

Program officer: A
member of a foundation’s staff who reviews grant proposals,
processes the applications, and arranges them for determination
by the decision-making board.

Program-related
investment (PRI): A loan or other investment (as
opposed to a grant) between a foundation and another
organization for the purpose of furthering the foundation’s
mission through a related project.

Program services: Monetary
payments made to an organization for services, directly
relative to its mission, for services provided.

Proposal: A
written application, often accompanied by supporting documents,
submitted to a foundation or corporate giving program in
requesting a grant. Most foundations and corporations do
not use printed application forms but instead require written
proposals; others prefer preliminary letters of inquiry
prior to a formal proposal.

Public charity: Qualified
501(c)(3) organizations that receive much of their income
from public or government sources.

Public foundation: A
nonprofit organization that gets at least one-third of
its yearly funds income from the general public (including
government agencies and foundations). back to top

Q

Qualifying distributions: Costs
made by a private foundation to satisfy its yearly payout
requirement, which can include administrative expenses,
grants, loans, set-asides, program-related investments,
as well as costs paid for assets used in pursuing its mission.

Query letter: A
short outline of an organization’s purpose and activities
and its request for funding used by the grant maker to
decide whether the request falls within the parameters
set forth by the funding organization. This will
determine whether a full proposal is appropriate. back to top

R

Restricted funds:
Grants that are made for a clearly specified purpose and
cannot be used for any other purpose.

Ruling year: The
year that the IRS approved 501(c)(3) status for an organization.

RFP (Request for
Proposal): An invitation by an organization,
typically accompanied by an outline of its specifications
and procedures, to contractors for submitting their proposals
to provide goods or services. back to top

S

Seed Money: Start-up
funds contributed for a new project or organization.

Set-asides: Money
that has been designated in a foundation’s yearly payout
requirement but is set aside for a specific project or
purpose. It must be paid out within the first five
years of the first set-aside

Special purpose
foundation: A private foundation that centers its
funding specific special interests.

Successor election: The
written designation by a donor of an individual who will
serve as a successor following the deaths of all donors
named on the account at the Charitable Gift Fund, and who
will be given the rights and duties of that donor’s account. The
donor may also suggest that one or more charitable organizations
be given the balance of the account. back to top

T

Tax exempt
organization: An organization, designated as nonprofit,
that is excused from paying state or federal taxes because
of its charitable activities. In order to be considered
tax-exempt, an organization must apply to both the IRS
and the state Attorney General’s office.

Technical assistance: Assistance
of an operational or a management nature provided to nonprofits,
either in the form of a gift to cover the costs of an outside
help or directly by way of the services of a foundation’s
or corporation’s staff. Examples of such assistance
include legal, marketing, fundraising, financial, or program
advice.

Trustee: A
board member of a foundation responsible for taking part
in the establishment of foundation policy and making fund
decisions. A trustee can also be the individual or
corporation who administers the terms of a trust document.

U

Unrestricted funds: Gifts
that do not stipulate specifically how gift funds are to
be used by the recipient. back to top